HomeMy WebLinkAbout7 Marsh Risk Insurance renewal Agenda Item # 7
TRUCKEE DONNER
public Utility Distri�ct j
CONSENT
To: Board of Directors
From: Mary Chapman
Date: July 16, 2008
Subject: Authorization to Renew Insurance Brokerage Contract with Marsh
Risk & Insurance Services
1. WHY THIS MATTER IS BEFORE THE BOARD
The District needs to renew its contract for insurance
authorize the rcont act renewal.age services with Marsh
Risk & Insurance Services. Only the Board
can2. HISTORY
At the April 2, 2008 meeting, the Board approved the extension of the District's
property and liability insurance from May 1 to June 1, 2008. At the May 21, 2008
meeting, the Board approved the renewal of the District's property and liability
insurance for the period covering June 1, 2008 through June 1, 2009. The Board also
ce Services for their brokerage fees in the
approved payment to Marsh Risk & Insuran ual contract for brokerage services was not
amount of $45,000. Approval of the act
part of the Board's action.
3. NEW INFORMATION
iewing the attached contract with Marsh for
Staff has received and legal counsel is rev
the period ended June 1, 2009.
Since the District extended the 2007-200p of the cont actl The month,
extens on cost
pay an additional brokerage fee for the extension
is one-twelfth of the 2007-2008 Marsh fee of $40,000 or $3,333.
4. FISCAL IMPACT
There is no additional cost to the District by this action.
5. RECOMMENDATION
ce brokerage services to be provided to the
Approve the attached contract for insuran
District by Marsh Risk & Insurance Services retroactively from May 1, 2008 through
June 1, 2009 subject to District's Counsel review and authorize the Board President to
execute said contract.
Michael D. Holley
Mary Cha man
General Manager
Administrative Services Manager
MARSH
( MARSH MERCER KROLL
GUYCA.RPENIER OLIVERWYMAN
Client Service Agreement
By and Between
Marsh Risk & Insurance Services
and
Truckee-Donner Public Utility District
AGREEMENT, effective May 1, 2008 (the "Effective Date"), between Marsh Risk
& Insurance Services ("Marsh"), and Truckee-Donner Public Util. Dist. ("Client').
It is agreed as follows:
1. Services.
Marsh is hereby engaged to act as the Client's risk management advisor
and consultant and insurance broker, as applicable, and shall provide the
Client with the services set forth on Appendix A (the "Services") in
accordance with the terms set forth herein. Appendix A may be amended
from time to time by written agreement of the parties. The additional
services set forth in Section 4 of Appendix A are available for additional
compensation and subject to the negotiation of separate agreements.
2. Comnensation.
(a) Marsh shall be compensated for providing the Services to the Client as
set forth on Appendix B. Appendix B may be amended from time to
time by written agreement of the parties.
(b) If there is a significant change in the Client's operations or exposures
that affects the nature and scope of its insurance program and/or
service needs, Marsh and the Client both agree to renegotiate Marsh's
compensation in good faith as appropriate.
3. Term and Termination.
(a) The term of this Agreement shall commence on the Effective Date and
shall terminate thirteen (13) months thereafter (the "Contract Term").
The Contract Term may be extended by mutual written agreement of
the parties.
(b) Notwithstanding the term, either party may terminate this Agreement
upon 90 days' prior written notice to the other party. If this Agreement
is terminated, Marsh will assist the Client in arranging a smooth
transition process, subject to receipt by Marsh of all amounts due
Marsh from the Client. However, Marsh's obligation and the obligation
of its affiliates (including, if applicable, Marsh's U.K. affiliates) to
provide Services to the Client will cease upon the effective date of
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termination, unless otherwise agreed in writing.
(c)ln the event of termination by the Client prior to expiration, Marsh's annual
compensation set forth on Appendix B for the current Contract Year will be
deemed earned in accordance with the following schedule, for Services
performed through the termination date: 60% at commencement of the current
Contract Year; 75% after four months; and 100% after seven months.
(d)ln the event of a termination by Marsh prior to expiration, Marsh's annual
compensation will be deemed earned on a pro-rata basis.
4. Authorization.
Marsh shall be authorized to represent and assist the Client in all
discussions and transactions with insurers relating to the lines of
insurance listed on Appendix A when acting as the Client's insurance
broker, provided that Marsh shall not place any insurance on behalf of the
Client unless so authorized by the Client in writing. Notwithstanding the
foregoing, at all times during the performance of this Agreement Marsh
shall be an independent contractor and shall not be an employee of Client.
5. Other Terms and Conditions.
The Standard Terms and Conditions set forth in Appendix C shall apply to
the Services performed by Marsh under this Agreement.
6. Governing Law_
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to its conflicts of law
provisions.
7. Miscellaneous.
This Agreement, together with all appendices attached hereto, contains
the entire understanding of the parties with respect to the subject matter
hereof and supersedes all written or oral prior agreements,
understandings and negotiations with respect to such matters. This
Agreement may be modified or otherwise amended and the observance of
any term of this Agreement may be waived, only if such modification,
amendment or waiver is in writing and signed by the parties hereto. This
Agreement shall be binding upon and inure to the benefit of the parties'
respective successors. Neither party shall have any liability for any failure
or delay in performance of its obligations under this Agreement because of
circumstances beyond its reasonable control, including, without limitation,
acts of God, fires, floods, earthquakes, acts of war or terrorism, civil
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disturbances, sabotage, accidents, unusually severe weather,
governmental actions, power failures, computer/network viruses that are
not preventable through generally available retail products, catastrophic
hardware failures or attacks on its server.
Marsh Risk & Insurance Services
By: Date:
Keith W. Grand
Vice President
Accepted and agreed:
Truckee-Donner Public Util. Dist.
By: Date:
Michael Holley
General Manager
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GUYCA.RFENT'ER CILIVERWV'MAII
Appendix A
Scope of Services
1. Marsh will act as the Client's risk management advisor and consultant and
insurance broker, as applicable, with respect to the following lines of
insurance (effective dates noted in parenthesis):
(a) Casualty (05/01/2008)
(b) Pollution Legal Liability (05/01/2008)
(c) Directors & Officers Liability (05/01/2008)
(d) Difference in Conditions (05/01/2008)
(e) Property (05/01/2008)
(f) Surety (05/01/2008)
2. As respects the lines of insurance in Section 1, above, Marsh shall provide
the following services:
(a) Work with the Client to assess the Client's risk exposures;
(b) Work with the Client to design and develop the Client's insurance
program;
(c) Assist with documentation and other steps to obtain commitments for
and implement the Client's insurance program upon the Client's
instructions;
(d) Keep the Client informed of significant changes and or trends in the
insurance marketplace and provide the Client with annual information
on market trends;
(e) Assist the Client in identifying insurers. Solicit quotes from insurers
selected by the Client for the placement of Client's insurance program
in accordance with the Client's instructions.
(f) Conduct a Renewal Strategy Meeting in advance of each placement.
(g) Negotiate on the Client's behalf with insurers and keep the Client
informed of significant developments in the negotiations;
(h) Assist the Client with the evaluation of options received from the
insurance market;
(i) Use best efforts to place insurance on behalf of the Client as directed
by the Client and secure the Client's approval prior to requesting
insurers to bind coverage;
(j) Follow up with insurance carriers for timely issuance of policies and
endorsements;
(k) Promptly respond to Client's questions related to coverage placed by
Marsh or the placement process;
(1) Deliver binders on or before the effective date of coverage being
placed, subject to placement;
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(m)Process or facilitate the processing and delivery of certificates or
memoranda of insurance and auto identification cards with respect to
insurance policies placed by Marsh, as requested by the Client;
(n) Review policies and endorsements for conformity to agreed terms and
coverages;
(o) Provide coverage summaries for all new placements and updates on
changes to existing policies;
(p) Review premium and exposure audits, rating adjustments, dividend
calculations and loss data;
(q) Assist the Client in establishing claims reporting procedures to
insurers,
(r) Monitor published financial information of the Client's current insurers
and alert the Client when the status of one or more of such insurers
falls below Marsh's minimum financial guidelines. Insurers with whom
the Client's risks have been placed will be deemed acceptable to the
Client, in the absence of contrary instructions from the Client;
(s) Provide the Client with detailed invoices, except in the case of direct
billing by insurers. Remit premiums to insurers and taxes and fees to
the relevant authorities on a timely basis, following receipt thereof from
the Client.
Sections 2(e), (g), (i), (j), (1), (m) and (s) will only apply with respect to
placements for which Marsh is acting as the Client's insurance broker.
3. Whenever the Marsh client executive is informed in writing by the Client
that a claim has been notified to the primary carrier, Marsh will notify all
applicable excess carriers of the claim, unless the Client gives the Marsh
client executive contrary instructions in writing, provided that Marsh has
placed the applicable excess policies or the Marsh client executive has
received written notice from the Client of the applicable carrier and
policies. If Marsh is instructed not to provide notice to any excess carrier,
Marsh shall have no responsibility for any consequences arising out of the
failure to give notice.
4. Additional Services are available for separate compensation and shall be
agreed upon in advance and addressed by amendment to this agreement
or by separate agreement (in certain cases with affiliates of Marsh). Such
additional services include, but are not limited to:
• Actuarial analysis of Workers' Compensation, General Liability, and
Automobile Liability claims, or other lines of insurance;
• Consulting relating to workers' compensation cost containment, including
behavioral risk management, absence management, cumulative injury
management, financial diagnostics and custom cost containment
solutions;
• Business interruption and other claim valuation services offered by Kroll's
Forensic Accounting practice;
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• Environmental risk consulting services;
• Operations and assets consulting services, including business continuity
management, supply chain risk management, loss control and engineering
support services and strategic risk assessments;
• Claims services other than those specified above, including catastrophic
claims support, mass tort claims support, claims management services,
special claims advocacy services and archival research;
• Services in connection with loss portfolio transfers and alternative risk
financing, including placements made in connection with such services;
• Captive insurance company feasibility studies;
• Establishment and administration of captive insurers;
• Placement of non-recurring insurance, including, but not limited to:
• "one-time" placements for construction projects,
• "one-time" placements for marine/cargo risks,
• "one-time" placements for surety,
• Placements for specific financial risks, such as trade credit,
• Placements involving significant quantitative or actuarial analysis or
modeling,
• Placement of risks with financial institutions other than insurance
carriers, and
• Placements of risks not customarily accepted by insurers;
• Employee benefits services;
• Pension plan consulting;
• Compensation consulting;
• Executive deferred compensation services;
• Risk management claims information systems, including STARS and
TrendTracker software programs, and related services;
• Enterprise Risk Management consulting;
• Strategic Risk Assessment;
• Provision of Marsh personnel on an out-sourced basis;
• Intellectual Property Consulting;
• Security Consulting;
• Insurance-related mergers and acquisition due diligence services and
transactional solutions;
• Placement and servicing of owner controlled insurance programs; and
• Interactive on-line client services.
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GUYCP.RPENTER GLIYERWYMAN
Appendix B
Compensation
As compensation for providing the Services, the Client shall pay Marsh a fee of
$48,333.00.
The fee shall be paid by the Client on May 1, 2008.
Prior to each placement by Marsh for the Client, Marsh shall disclose to the
Client and obtain the Client's approval of any commissions to be collected by
Marsh or its affiliates with respect to such placement. Marsh shall credit amounts
equal to any retail commissions collected by Marsh or its affiliates against
remaining installments of the fee (except as provided below) and, to the extent in
excess of the remaining installments, refund previously paid installments of the
fee. In the event such retail commissions for a Contract Term exceed the fee for
that term, then such excess retail commissions shall be returned to the Client if
permitted by law. Otherwise, an amount equal to such excess retail
commissions shall be carried forward and applied against Marsh's compensation
for subsequent terms if permitted by law. Any wholesale commissions collected
by Marsh or its affiliates will not be credited against the fee.
Marsh shall be compensated for providing its Services with respect to Flood
placed through the National Flood Insurance Program through commissions
received from insurers, which shall be in addition to and not be credited against
the fee. Marsh shall disclose to you and obtain your approval of these
commissions prior to placement. Marsh will deliver Flood Zone Determinations
to you for an additional fee of $8.75 per Determination, payable to Kroll.
In addition to the compensation set forth above, Marsh's foreign offices and
affiliates shall be entitled to receive commissions on foreign local placements
made on behalf of the Client or its foreign subsidiaries, which shall be in addition
to and not be credited against the fee. Marsh shall disclose to the Client and
obtain the Client's approval of such commissions prior to placement. Marsh may
make such disclosure to and obtain such approval from the Client's local
operating management.
In the event (i) the Client elects to obtain insurance for a particular line of
coverage from a foreign insurer and that insurer is domiciled in a country not part
of the Client's insurance program with respect to such line of coverage as of the
commencement date of this Agreement and (ii) the resources and services of a
foreign Marsh affiliate are necessary or appropriate for such placement, Marsh
and the Client shall negotiate additional compensation for such services and/or
modification to Marsh's compensation in good faith.
Any commissions collected by Marsh or its affiliates shall be considered fully
earned at the time of placement, including if an insurance policy placed by Marsh
or its affiliates for the Client or its foreign subsidiaries is terminated by the Client
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or its foreign subsidiaries prior to expiration unless such policy is replaced by
another policy placed by Marsh or its affiliates for the Client or its foreign
subsidiaries during the term of this Agreement.
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Appendix C
Standard Terms and Conditions
These Standard Terms and Conditions are part of the attached Client Service
Agreement between Truckee-Donner Public Util. Dist. (the "Client") and Marsh
Risk & Insurance Services ("Marsh").
1. Taxes and Fees.
In certain cases, insurance placements that Marsh makes on the Client's
behalf may require the payment of insurance premium taxes (including
U.S. federal excise taxes), sales taxes, use taxes, surplus or excess lines
and similar taxes and/or fees to federal, state or foreign regulators, boards
or associations. The Client agrees to pay such taxes and fees, whenever
assessed. To the extent practical, such taxes and fees will be identified by
Marsh on invoices covering such placements. Any such taxes and fees
collected by Marsh will be promptly remitted by Marsh to the appropriate
authorities.
2. Client Responsibilities,
The Client shall be solely responsible for the accuracy and completeness
of information and other documents furnished to Marsh and/or insurers by
the Client and the Client shall sign any required application for insurance.
The Client recognizes and agrees that all insurance coverages placed in
connection with this Agreement and all Services, evaluations, reports and
recommendations provided by Marsh hereunder are based on data and
information furnished by the Client. Marsh will be under no obligation to
investigate or verify the completeness or accuracy of any such data or
information, nor will Marsh have any liability for any errors, deficiencies or
omissions in any Services, evaluations, reports or recommendations
provided to, or any insurance coverages placed on behalf of, the Client
that are based on such inaccurate or incomplete data or information. The
Client understands that the failure to provide all necessary information to
an insurer, whether intentional or by error, could result in the impairment
or voiding of coverage.
The Client will review all policies, endorsements and program agreements
delivered to it by Marsh and will advise Marsh of anything which the Client
believes is not in accordance with the negotiated coverage and terms
within thirty days following receipt.
3. Intermediaries.
(a) When in Marsh's professional judgment it is necessary or appropriate
and subject to the Client's prior approval, Marsh may utilize the
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services of other intermediaries, including wholesale brokers, to assist
in the marketing of the Client's insurance. Such intermediaries may be
affiliates of Marsh.
(b) Wholesale brokers may represent insurers or act as managing general
agents. Prior to utilizing a wholesale broker in connection with a
placement for the Client, Marsh shall disclose to the Client the
compensation received or to be received by Marsh and its affiliates in
connection with the wholesale placement, any interests of Marsh and
its affiliates in the wholesale broker, any contractual agreements
between Marsh and its affiliates, on the one hand, and the wholesale
broker, on the other, and alternatives to using the wholesale broker.
(c) Marsh shall disclose to the Client the compensation of any Marsh
affiliated intermediaries utilized in connection with the Client's
placements, and obtain the Client's consent to such compensation,
prior to the binding of coverage. Marsh shall disclose to the Client the
compensation of any non-Marsh affiliated intermediaries utilized in
connection with the Client's placements to the extent known by Marsh.
4. Other Revenue.
(a) If the Client requests assistance with obtaining premium financing in
connection with the Client's placements and Marsh provides such
assistance, Marsh may receive compensation from the finance
company that provides premium financing to the Client. Marsh shall
provide to the Client information relating to Marsh's and its affiliates'
arrangements with and interests in the premium finance companies to
be considered by the Client and the compensation that Marsh and its
affiliates would receive from finance companies with respect to the
Client's placements.
(b) Marsh earns and retains interest income on premium payments held
by Marsh on behalf of insurers during the period between receipt of
such payments from clients and the time such payments are remitted
to the applicable insurer, where permitted by applicable law.
5. Confidentiality.
(a) Confidential Information.
The Client may provide Marsh with certain proprietary and confidential
information ("Confidential Information") in connection with the Services
provided by Marsh under this Agreement. Neither Marsh nor any of its
employees or agents directly or indirectly shall disclose to any third
party or use any Confidential Information furnished by or on behalf of
Client for any purpose except in furtherance of the Services and in
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furtherance of other insurance brokerage, risk consulting, risk
financing, risk transfer, employees benefits or other insurance-related
services rendered by Marsh to Client, which may include in the normal
course of business the release to insurers and other financial
institutions of Confidential Information relevant to the underwriting
and/or evaluation of Client's risks and the processing of its claims,
provided that such insurers and financial institutions are informed of
the confidential nature of such information. Marsh shall take all steps
reasonably required to maintain the confidentiality of Confidential
Information in Marsh's possession. The transmission of Confidential
Information via electronic data transmission networks which provide for
the security of users' data shall be deemed consistent with Marsh's
obligations hereunder unless such use is contrary to Client's express
instructions.
(b) Exceptions.
The restrictions and agreements set forth above shall not apply to any
Confidential Information: (i) which at the time disclosed to or obtained
by Marsh is in the public domain; (ii) which becomes part of the public
domain through no act, omission or fault of Marsh; (iii) which Marsh's
records demonstrate was developed independently by Marsh or was
received by Marsh from a third parry which Marsh had no reason to
believe had any confidentiality or fiduciary obligation to the Client with
respect to such information; (iv) which is required to be disclosed by
law, including, without limitation, pursuant to the terms of a subpoena
or other similar document; provided, however, Marsh shall, to the
extent practical, give prior timely notice of such disclosure to the Client
to permit the Client to seek a protective order, and, absent the entry of
such protective order, Marsh shall disclose only such Confidential
Information that Marsh is advised by its counsel must be disclosed by
law; or (v) following the lapse of two years after disclosure of such
information to Marsh.
(c) Return of Confidential Information.
As between the Client and Marsh, Confidential Information shall be the
sole and exclusive property of the Client. Upon the Client's request, all
documents and records in Marsh's possession containing Confidential
Information shall be returned to the Client; provided, however, that
Marsh may retain copies of documents that may contain Confidential
Information which are necessary for the conduct and proper record
keeping of Marsh's business in accordance with standard operating
procedures or applicable law.
(d) Remedy.
It is understood and agreed that money damages would not be a
sufficient remedy for any breach of these confidentiality provisions and
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the Client shall be entitled to injunctive relief as a remedy for such
breach, without prejudice to any other rights or remedies available to
the Client under applicable law.
6. Record Retention.
Files (other than core documents, as defined in Marsh's record retention
policy, including insurance policies, which are permanently retained) will
not be retained for more than five years after the expiration of a particular
policy's term.
7. Disclaimers• Limitation of Liability.
(a) Marsh does not speak for any insurer, is not bound to utilize any
particular insurer and does not have the authority to make binding
commitments on behalf of any insurer, except under special
circumstance which Marsh shall always endeavor to make known to
the Client. Marsh shall not be responsible for the solvency of any
insurer or its ability or willingness to pay claims, return premiums or
other financial obligations. Marsh does not guarantee or make any
representation or warranty that insurance can be placed on terms
acceptable to the Client.
(b) If Marsh has taken over any existing program or policies implemented
by another broker, Marsh will not assume any responsibility for the
adequacy or effectiveness of those programs or policies or any acts or
omissions occurring prior to Marsh's engagement. Within 45 days,
Marsh will have completed a review of such programs and policies and
will make recommendations it believes are necessary.
(c) Any loss control services and/or surveys performed by Marsh under
this Agreement are advisory in nature. Such services are limited in
scope and do not constitute a safety inspection as provided by a safety
engineering service. Marsh does not claim to find or include every loss
potential, hazard, statutory or code violation or violation of good
practice. All surveys and reports are based upon conditions observed
and information supplied by the Client. Marsh does not expressly or
impliedly guarantee or warrant in any way the safety of any site or
operation or that the Client or any of its sites or operations is in
compliance with federal, state or local laws, codes, statutes,
ordinances or recommendations. In any event, Marsh's liability if any,
relating to or arising out of loss control services performed by it for the
Client shall not exceed the total compensation paid to Marsh under this
Agreement.
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